Ag Organizations Send Letter to Governors on NAFTA

Last week, 22 agricultural associations submitted a letter to the governors of each state expressing concern about the potential of a withdrawal from the important trade agreement.  Among these organizations are ones very familiar to our region:  Agrimark, American Farm Bureau Federation, Coalition of New England Companies for Trade (CONECT), IDFA, National Council of Farmer Cooperatives, and others.

‘Notice of withdrawal from NAFTA would result in substantial harm to the U.S. economy generally and U.S. food and agriculture producers, in particular’, the letter said.  It went on to state:  ‘Notice of withdrawal from NAFTA would result in substantial harm to the U.S. economy generally and U.S. food and agriculture producers, in particular. While it has been asserted that negotiations could be completed and a new agreement approved subsequent to issuance of notice of withdrawal, but prior to actual withdrawal, that observation underestimates the business complexity, integrated supply chains and contracting periods involved. Such a notice of withdrawal would fuel additional uncertainty among our North American trading partners, creating a sense of urgency to explore non-U.S.-origin sources of supply. It also would trigger a substantial, immediate response in commodity markets, as market-specific focus would turn to a scheduled return to trade-prohibitive tariff rates. Contracts would be renegotiated or cancelled, sales would be delayed or lost altogether, able foreign competitors would rush to seize our export markets, and litigation would abound even before withdrawal took effect.’

According to the authors of the letter, some possible ramifications of withdrawal are ‘the negative impact on the United States would far outweigh any benefits from higher U.S. tariffs, including a net loss of 256,000 U.S. jobs, a net loss of at least 50,000 jobs in the U.S. food and agriculture industry, and a drop in GDP of $13 billion from the farm sector alone. NAFTA withdrawal would also disrupt critical industry supply chains, close markets, eliminate jobs, and increase prices for the basic needs of American consumers.’

The letter urges the Governors to let President Trump know ‘that you support a modernized NAFTA that maintains and enhances food and agricultural trade between the U.S., Mexico and Canada, and recognition that withdrawal from the accord would have adverse impacts.’

Whether the President has the unilateral right or authority to withdraw from an existing international trade agreement, without the approval of Congress, is an issue that may have to be settled in court.  This letter to our nation’s Governors is an attempt to prevent that potential legal quagmire from happening.

We will keep you informed of news on the NAFTA negotiations as they become public.

Ballot Measures in Maine, New York, New Jersey, Pennsylvania

CSG’s The Current State reported this week on recent ballot measures in Maine, New York, Pennsylvania, and New Jersey. Maine’s Question 2, a voter initiative, proposed the expansion of Medicaid, seeking to expand health care coverage to adults under the age of 65 who are at or below 138 percent of the federal poverty level. About 70 percent of voters in Maine voted “yes.” New York voters turned down a proposal to hold a constitutional convention in 2019. Read the full article here.

Puerto Rico’s Agriculture Sector devastated by Hurricane Maria

If you have been following the utter devastation from hurricanes this year in both Puerto Rico and the US Virgin Islands, you have heard little about agriculture on the islands and how it was impacted. Most of the media attention has gone to the human tragedy, and rightfully so. There are a lot of reports about the electric infrastructure being destroyed, communications being wiped out, a lack of food and water, roads closed, bridges out, and hospitals in chaos. But we hear little about the fate of Puerto Rico’s agriculture.

Here is a look at Puerto Rico’s agriculture industry data prior to Hurricane Maria from a 2014 Report by the USDA accumulated from the last “Census of Agriculture”.

• There were 13,159 farms in Puerto Rico as of the last Census of Agriculture, consisting of 584,988 acres or an average of 44.5 acres per farm. Fifty one hundred farms are less than 10 acres, while 385 farms are more than 260 acres. The second largest category of farm acres is 50 to 99 acres with 940 farms.
• Of the 584,000 acres of farmland, 67,000 are pasture land, 3,000 acres are woodlots and 433,000 acres are crop producing land, 63,000 of which are irrigated. Much of the best agriculture land of Puerto Rico is relatively dry, in the rain shadow of the central mountains.
• Puerto Rican Farmers hire about 30,000 workers each year with about half of those being full time and the other half either part time or seasonal. Losing your agriculture sector puts 30,000 Americans out of work as well as the 13,000 farmers themselves.
• The total agriculture output value of production of these 13,159 farms is $547 million, in 2012, with $271 million of that from crop sales. The largest crops in Puerto Rico are sugar, Plantains, followed by fruits and coffee.
• Of note, $50 million in plantains was lost to the hurricane. When ERC was in Fajardo Puerto Rico in 2013, we learned that it takes 18 months to grow plantains from planting to harvest, which will severely impact the future income potential of the plantain farmers.
• There are 257,000 cows on the Island, of which 100,000 are dairy cows, as well as 48,000 hogs and 10.9 million chickens.
• The ornamental sectors of agriculture output is worth $37.5 million, including Christmas poinsettias.

What was Puerto Rico’s agricultural industry is largely gone for the next year or longer, in many cases, due to the hurricane’s devastation. Dairy brings with it special problems. Feed crops were devastated, barns destroyed, milking parlors flooded. There is no electric for milking machines or refrigeration for the raw milk in storage.  Electricity or not, the cows still need to be milked twice a day.

Puerto Rico’s Secretary of Agriculture, Carlos Flores Ortega, estimates that 80% of the entire crop in the agriculture sector was wiped out, based on value. According to Secretary, this loss amounts to $780 million, with plantains, bananas and coffee the hardest hit. Poultry barns were blown away, killing the chickens in the process.

The U.S. Virgin Island’s agricultural sector is much smaller than Puerto Rico’s, but important to them all the same. At this time the Virgin Island figures are sketchy, but all one has to do is look at the before and after satellite pictures to see the lush green Virgin Islands go from green to brown to know that the island has lost crops.

The US House has already approved $12 billion in immediate aid to the Islands, and the House Natural Resources Committee will be holding hearings on the progress being made in both territories on both November 7 and 14. Our CSG/ERC eyes and ears in Washington, Fran Boyd, will attend both of these hearings.

What is CSG / ERC doing to help? We have been working with Annabel Guillen, the Federal Affairs Advisor to the Senate of Puerto Rico, and have had a conference call with a staffer to Puerto Rico’s non-voting Representative to Congress, Jennifer Gonzalez Colon, to ask what the ERC can do to help both long- and short-term. The most immediate need they had was not supplies, but office space in Washington. As a result, Wendell Hannaford and ERC have located office space where Ms. Guillen can station several volunteers to operate phone banks to field calls and offers for assistance. That office space, funding for which is provided by CSG-ERC, is in the Hall of States, and comes with unlimited WIFI.

We are awaiting requests for more assistance. Debbie Paige, ERC’s Military and Veterans Affairs Committee and Policy Analyst and Coordinator for the Council on Communities of Color, is working with members in the Virgin Islands to identify items needed, which we will ship to legislators to be used in their district offices, most of which were destroyed. As we learn what can be done to help the Puerto Rican and U.S. Virgin Islands agricultural community, we will make that known.

North American Free Trade Agreement (NAFTA) Renegotiation

On July 17, the Office of the United States Trade Representative released their report entitled ‘Summary of Objectives for the NAFTA Renegotiation’.  One of the promises made by Candidate Trump was a renegotiation of the North American Free Trade Agreement.  In a tweet from October 2016, Trump said, ‘I will renegotiate NAFTA. If I can’t make a great deal, we’re going to tear it up. We’re going to get this economy running again.’  However, in April 2017, President Trump stepped back from his plan to issue an Executive Order removing the US from NAFTA in favor of renegotiation of the trade deal.  This Summary of Objectives is a result of that decision.

Agriculture plays a large part in the Summary, with cross border agricultural trade being a large part of our import/export activity with Mexico and Canada.

To quote the Summary, ‘The new NAFTA must continue to break down barriers to American exports. This includes the elimination of unfair subsidies, market-distorting practices by state owned enterprises, and burdensome restrictions of intellectual property’.  Among these barriers mentioned were tariffs, price discrimination, regulatory incompatibility, lack of communication and technological capability, verification of country of origin of agricultural products.

Among other areas for renegotiation are: Environmental, Regulatory, Transparency, Labor, Anti-Corruption, and Trade Protection.

In response to the release of the Summary, Michael Dykes, D.V.M., president and CEO of the International Dairy Foods Association, issued the following statement in support of the report, saying “We are pleased to see efforts to address unjustified measures that unfairly limit access to markets for U.S. goods, such as price undercutting, included in the administration’s negotiating objectives. We believe these goals will allow the administration to address Canada’s new milk pricing policy, referred to as Class 7, which has allowed Canadian companies to sell their products below world market prices.

“In addition, we’re pleased to see an objective to expand competitive market opportunities for U.S. agricultural goods by reducing or eliminating tariffs. Canadian tariffs on some U.S. dairy products are nearly 300 percent.”

On the other hand, in testimony before a subcommittee of the Trade Subcommittee of the House Ways & Means Committee on the objectives of the NAFTA renegotiations, Stan Ryan, CEO of Darigold, a large farmer-owned cooperative in Washington State, urged caution.

‘NAFTA has been a driving force behind remarkable growth in dairy exports, and is the reason the United States’ share of Mexico’s dairy imports today is 73 percent.’  He noted that U.S. dairy sales to Mexico have risen to $1.2 billion last year from just $124 million in 1995.  He worried that the preferential tariffs enjoyed by the U.S. could be undermined if the benefits of NAFTA are watered down in renegotiating the dairy provisions of the agreement.

However, Ryan criticized the new Canadian dairy Class 7 system.  “It essentially matches the lowest price in the world for milk protein finished products, despite Canada having one of the world’s highest raw milk farm gate  prices, all operating under a state-controlled and state-protected system.  Common sense to economics would tell you that if it looks and feels like subsidized dumping, it probably is.”

The U.S. Trade Representative announced that seven rounds of NAFTA negotiations will begin August 16.  We will keep you informed of all developments in these talks as they progress.

 

Meet NH State Representative Steve Darrow

Let us introduce Representative Steve Darrow, Vice Chair of the New Hampshire House Committee on Environment and Agriculture, and a first time attendee to the ERC Annual Meeting. Steve is a member of the CSG-ERC Agriculture and Rural Affairs policy committee.

Rep. Darrow has been a resident of NH for forty-five years.  Rep. Darrow has a degree from Franconia College in Literature.  He has been involved in local government, being the current chair of the Pemi-Valley Republican Committee and former selectman from Grafton, NH for twelve years.   In addition, Steve was a member of the school board for his school district, and has been active with the area trail maintenance volunteer group.

Steve was treasurer as well as member of the Board of Directors of the Mascoma Valley Health Initiative. Steve explained that the area in which he lives is very rural, and, because of that, the access to healthcare is limited. The Mascoma Valley Health Initiative is a non-profit organization with the mission of making health care more accessible for local residents, and helps with everything from providing transportation to lobbying for a new local health center.

Representative Darrow is retired from UPS after 28 years, during which time he spent nine years in Sales, nine years in Operations, and finally nine years in Industrial Engineering where he helped UPS become more technologically advanced.

We asked Steve what piece of legislation made him most proud, and he mentioned three things. HR7, which was a resolution that resolved to limit campaign contributions from any entity that will not be ineligible to vote in the next election. Second, he was very proud to vote for relief for NH dairy farmers, which provided $2.1 million to help offset the devastating impacts of 2016’s drought.  And lastly, although not a bill, but Darrow is very proud to sometimes buck the system and vote against the wishes of his party. He prides himself in being able to decide for himself what is best for his constituents.

When asked what he likes most and least about being a representative, Steve responded that he really likes being a part of such an historical body and process. He likes being able to speak up for what he supports or opposes. Steve further commented that he loves the committee work. He further noted that the NH House and Senate has a lot of great people with whom he is proud to serve.  However, he went on to say that he what he disliked the most was the obstructionists in both parties, something he sees as becoming more and more prevalent over the years.

We asked what attracted Steve to the Agriculture Committee, and he said he has always had an interest in agriculture and gardening, and likes being able to promote local agriculture and to support small farms. Since the NH House Committee on Environment and Agriculture also handles solid waste, it further attracted him, since he is a licensed transfer station operator and worries about our disappearing landfill capacity.

We asked Steve what he expected from his first ERC meeting. He said he is looking forward to networking and being able to meet with other legislators, and learning from them what their states’ issues are and what they are doing about them.

Rep. Steve Darrow is just one of the members of the Agriculture and Rural Affairs Policy Committee for ERC coming to the Annual Meeting August 13 through 16 in Uncasville, Connecticut this summer.  Join them by registering at www.csg-erc.org.

Meet the Legislator – MA Senator Anne Gobi

Senator Anne Gobi lives in Spencer, Massachusetts, the town where she was born and raised. After graduating from Worcester State College, Anne studied law at Massachusetts School of Law at night while teaching high school during the day.  After passing the bar, she went into private practice.

A member of the Spencer Democratic Town Committee since 1998, Anne was asked to run for an open seat in 2001.  We asked her if she was anxious about the campaign.  ‘I had never run for anything before this.  The representative in the district before me was a Republican.  Raising money was the hardest part.  I had a primary in my first election, and I had to raise over $50,000 for the campaign, which was hard.  But I won.’  She was a member of the Massachusetts House of Representatives for 14 years, serving on multiple committees including the Joint Committee on Environment, Natural Resources and Agriculture, of which she was co-Chair.

We asked her why she chose go serve on the Agriculture Committee.  ‘In Massachusetts, we have a wish list for committee assignments.  When I was first elected, I was assigned to committees.  But since I grew up active in 4-H and live in a rural district, I wanted to serve on the Agriculture Committee, which I did.  It took me a while to be named chair, but I was, and eventually served two terms as Chair.’  Anne was elected as State Senator in 2014, and she is currently in her second term as Chair of the Senate Ag Committee.

We asked if she likes being a Senator.  ‘I like it, even though there is a lot of work.  Over 300 bills come to my committee during the biennium, and I make sure that the committee works hard on each one.

When we asked what the biggest issue was facing agriculture in Massachusetts today, Anne did not hesitate.  ‘Farm viability.  Massachusetts has 7,000 farms, but most of them are very small.  Last year’s drought affected them badly.  We have to find a way to make farming sustainable for our farmers.’  Another problem with agriculture in the state is the number of outdated laws, particularly the agricultural preservation statutes. The way they were written when people went into them thirty years ago is not the way things are now.  It is a challenge updating laws so that farms can have viability and diversify on their farm so they can survive.  Young farmers need the help most.

Ann said that Massachusetts is losing an alarming number of dairy farms. ‘We’re down to about 160, roughly.  There were thousands at one time.  Within the last ten years we have lost another 25’

She is optimistic with some new trends in agriculture.  ‘Farm breweries are cropping up.  There is a Barre dairy farm that is milking cows and selling beer as well.  One woman who works there said ‘15 cents for a pint of milk, $7 for a pint of beer.’

According to Anne, the biggest non-agriculture issue that the Massachusetts Senate faced this year is the fact that revenues are not coming in at the pace they should be.  Uncertainty on the federal level and the effect that will have is a huge worry.  Health care is almost 51% of the budget.  The state is facing a $870 million deficit.  Currently the state has no tax on online sales.  There should be a way to capture this revenue that has been lost due to the closing of brick and mortar stores in favor of online sales.  Also Massachusetts is home to a large number of financial institutions and service industries that pay no taxes.

Senator Gobi said the thing she likes most about being in the legislature is that it is never boring.  There is a different issue every day.  ‘You never know when the phone rings or when you open an email what is going to be there.’  She likes to keep active, and the legislature helps to provide change and challenge.  What she dislikes most is her long commute to the statehouse, which takes a lot of valuable time out of day.

e says she has enjoyed working and being invited to CSG-ERC meetings and seminars.  She especially likes that she is able to go online and get information on what is happening in other states and in Washington.  This resource is tremendously helpful to her and her staff.

Come and meet Senator Anne Gobi and other dedicated legislators interested in Agricultural and Rural Affairs policy this summer at the 2017 CSG-ERC Annual Meeting in Uncasville, Connecticut (‘Mohegan Sun’) from August 13 through 16.

Trump Signs Executive Order on Agriculture

On April 25, 2017, President Trump signed an Executive Order entitled ‘Promoting Agriculture and Rural Prosperity in America’.

The Order establishes an Interagency Task Force on Agriculture and Rural Prosperity, which will be supported and funded by the Department of Agriculture.  (To read the full text of the Executive Order, click here)

The Task Force will be comprised of 22 members representing the Chairs and Directors of a wide spectrum of government agencies, and will be chaired by the Sonny Perdue, newly-confirmed Secretary of Agriculture.

The stated purpose of the Task Force will be to identify changes in policy, regulations and law that will promote rural America agriculture. Some areas identified for study are increased educational opportunity in rural communities, regionalization of economic development programs, access to reliable workforce, preservation of family farms, improve science-based food safety regulations and policies, encourage exports of agricultural products, advance renewable energy in the rural landscape and expand access to grazing, timber harvesting, mining and recreation on public lands.

The Task Force will be open to recommendations for legislative, regulatory and policy changes from stakeholders, and will produce a report of their findings within 180 days from the date of signing.

We will be briefing members on news of the progress of the Task Force over the next six months.

 

Bob Haefner and Tara Sad
CSG/ERC Agriculture & Rural Affairs Policy Advisors

A First Look at President Trump’s USDA Budget for 2018

Any budget proposal is, by its nature, partisan.   However, we will present the facts as we know them, in a non-partisan manner, and let you decide if you agree or disagree with the budget proposal. We must keep in mind that the President’s budget is merely a proposal. Once the executive branch presents the budget to the US House of Representatives, it is under their control and is no longer the President’s budget. Of course, any President has some influence over what the Congress does with the proposed budget, especially if they are of the same party affiliation. Any proposed budget reflects the priorities of the submitter of that budget. However, we can be assured that, as the budget wends its way through legislative channels, it will take on the priorities of the legislative branch.

That allocation of limited revenue to programs is how we prioritize what is important to a given administration and what makes budgeting a partisan issue. Democrats have different priorities than Republicans, or Libertarians, or even Independents. As the Vice Chair of the NH House Finance Committee often says, “For every one of the thousands of lines in the budget, there is an advocate who says, ‘Cut any line you want except this one’. If you listen to every advocate, you would never cut a penny from the budget.”

Now let’s look at the Trump proposed budget and how it affects the USDA. The proposed budget recommends a 21% cut to total USDA discretionary line items. It does not propose any cuts to mandatory portions of the USDA budget. So the Nutrition Title has not been touched, which includes programs such as the Supplemental Nutritional Assistance Program (SNAP), school lunches and children’s nutrition program. The President’s full proposal is not scheduled to be released until May. Of course, Congress alone can make changes to mandatory spending, since these changes require amending law to affect that part of the budget. This budget proposal really only affects programs that benefit our farmers, and it is the fact that it affects our farmers that makes it critical for   to the Northeast Agriculture Legislators. It is important to note here that this budget proposal came from the White House Budget Director Mulvaney and was not reviewed by the USDA since there was not a confirmation of the nominee at the time.   What impact Secretary Perdue’s involvement in the proposal’s outcome would have had is unknown..

The USDA budget is $155 billion, of which $133 billion (85%) is mandatory spending for nutrition programs and its administration. That leaves $22.6 billion, which is discretionary and allocated for our farm programs. That number had been higher in past years, but between recent sequestrations and cuts from the last administration, it is down to $22.6 billion. The Trump proposal cuts another $4.7 Billion, bringing the discretionary total to $17.9 billion (a 21% cut). The only nutrition program in the $22.6 billion (before the cuts) is WIC. The proposal cuts $150 million from WIC, about half of the previous administration cut of $273 million, based on reduced enrollment due to higher employment numbers. The USDA discretionary spending is one-tenth of 1% of the total federal budget, and yet the USDA has 4,500 offices across the country and territories, and has nearly 100,000 employees spread over 30 different agencies.

So what has been cut in this proposal?  Let’s take a look at what the proposal for the USDA discretionary budget really does based on the information as we have it. ‘Discretionary Spending’ includes Food Safety (meat processing), Rural Development, Conservation, Research Grants, and International Food grants. Cuts do not affect the various insurance programs, such as crop insurance.

International Food Aid  – $200 million

Water and Waste Disposal loans and grants  – $500 million

Rural Business Cooperative Service  – $95 million (duplicative)

Funding for National Forest Service  – No new land purchases

Reduced Staffing  –  All levels

WIC  –  $150 million

In addition, there will be cuts to some statistical services and other areas not yet identified.

While this discussion may be premature considering the many unknowns, we thought it important that we share the information at hand. We will continue to give updates as new data becomes available. In May, the full budget will be rolled out, and our new Secretary of Agriculture and Congress will have their go at the budget. It will be debated by the two parties of the House of Representatives.

In August at the CSG-ERC Annual Conference in Uncasville (Aug. 13-16), and in conference calls starting next month, we will also work as a region to develop a regional position on the Farm Bill, currently in negotiations. This will, of course, affect the following budget cycle. As individual states we are relatively insignificant, but as an eleven-state region, we have 87 members in the US House of Representatives – or 20% of the total votes. So we are not insignificant when we work together.

 

Amid a Spate of Nuclear Plant Closings, State Officials Mull Economic, Environmental Impacts

Nuclear power has long been a mainstay of the Northeast’s energy mix, but a wave of planned retirements has fueled a debate about the fate of aging reactors, and their value to the region’s economy as states work to achieve a variety of energy and climate goals.

In New York and Connecticut, independent analyses have shown that if nuclear plants were to close prematurely, much of the replacement power would come from the burning of fossil fuels, because it would be impossible to ramp up enough wind and solar generation to offset the electricity, at least in the near-term. That would lead to an increase in emissions of carbon and other pollutants, making it challenging to meet states’ climate objectives.

The studies advise that discussions around the future role of nuclear power consider a full accounting of the avoided costs of carbon-free generation compared with fossil fuels – to consumers, the environment and public health.

New York’s Policy

Last year, New York regulators assessed those costs before they approved subsidies to help the James A. FitzPatrick, R.E. Ginna and Nine Mile Point nuclear plants, located upstate. The plants were considering closing because of stagnant energy demand, and fierce competition with rock-bottom natural gas prices in interstate energy markets. Audrey Zibelman, chairwoman of the New York Public Service Commission, told The New York Times last August that the social and economic benefits of New York’s program — including reduction of carbon emissions, lower prices for electricity and jobs in the power-generation industry — would be much greater than the cost to ratepayers, which state officials estimate will total less than $2 a month.

The reactors provide more than 3,300 megawatts of power combined, some 15% of the state’s electricity output. They also supply 61% of the state’s carbon-free generation, and if they shut down, their power would be primarily replaced with natural-gas generation, according to an analysis from The Brattle Group.

Zibelman said the resulting rise in emissions would detract from Gov. Andrew Cuomo’s goal of cutting carbon emissions 40% below 1990 levels by 2030, and 80% by 2050. The economic toll would be high, too: consumers would be expected to pay $15 billion more in electricity prices over the next ten years, and the costs to the environment and human health from increased emissions of carbon dioxide, sulfur dioxide, nitrogen-oxides and particulates would total an estimated $736 million.

The New York policy and a similar one that would help two struggling plants in Illinois is opposed by electric generators, who made two filings at the Federal Energy Regulatory Commission (FERC) arguing the subsidies distort and undermine wholesale power markets.

Elsewhere in the Northeast, the Vermont Yankee plant retired in 2014, and two more reactors are scheduled to close in 2019, nearly a decade or more before their scheduled license expirations: Entergy Corporation’s Pilgrim plant in eastern Massachusetts, and Exelon’s Oyster Creek plant in eastern New Jersey.

Legislative Efforts in Connecticut: Assessing the Avoided Costs of Carbon-Free Power

In Connecticut, which gets 60% of its power from the 2,111-megawatt Millstone Nuclear Power Station, state lawmakers are debating a proactive strategy to ensure the plant stays in operation in the coming years.

Although Millstone’s owner, Dominion Energy, has not announced plans to close, lawmakers are considering a measure that would enable the plant to compete in a state renewable energy procurement program, as a way to lock in long-term power prices for a portion of its output. Proponents stress the bill’s intent is to enhance affordability for ratepayers, and guarantee a continued supply of zero-emission power to help the state meet its target of reducing greenhouse gas emissions 80% below 1990 levels by 2050. Millstone provides 98% of Connecticut’s carbon-free electricity.

Instead of offering subsidies to support nuclear output as New York and Illinois have done, the bill’s sponsors have made it clear that their approach is market based, and is intended to encourage the growth of renewables, too.

The legislation, which passed the joint Energy and Technology Committee last week, would enable the plant to secure long-term contracts for nearly half of its output, avoiding the volatility of daily wholesale power markets. Millstone had been insulating itself from the highs and lows of the spot market by selling energy through a series of futures contracts that run for three years. But the daily market is so volatile that the futures market has faltered, the Connecticut Mirror reported last year. Company officials have said the bill will lead to lower electricity prices for consumers.

The proposal has led to a heated debate in Connecticut, with opposition coming from petroleum industry, consumer advocates, and environmental groups worried that allowing nuclear power to compete in a market reserved for renewables will undercut prices for wind, solar and other emerging energy sources, just as natural gas prices have undercut nuclear power.

But the version that was voted out of the Energy and Technology Committee included language specifically intended to prevent cheaper nuclear power from jeopardizing the state’s growing clean-energy industry. The bill would enable Millstone to sell 950 megawatts of power – a little less than half its total output — through a state-run bid process, but limits its contract to five years. That compares with the 20-year contracts permitted for renewable generation. The legislation specifies that Millstone’s proposal must be in the “best interest of ratepayers.”

The bill also calls for an escalation of clean-energy development. It would extend, for at least one more year, the state’s popular zero-emissions (ZREC) and low-emissions (LREC) programs, which offer incentives for the deployment of distributed generation through a competitive reverse auction. In addition, it ramps up the state’s clean-energy mandate, requiring that by 2040, the state obtain 40% of its power from renewables, which is double the 2020 goal. Lawmakers are still negotiating to add some additional renewables “encouragers” as well, said Rep. Lonnie Reed, House chair of the Energy and Technology Committee.

Their thinking is that encouraging Millstone to keep running, at least in the near-term, would avoid an increase in emissions from fossil fuel generation while new capacity comes online from solar installations, wind turbines, fuel cells and other sources. Reed said that if Millstone were to shut down, there is a real danger that duel-fuel natural gas and oil plants would be built to replace the reactor’s massive output in order to meet Connecticut’s and New England’s electricity capacity needs. Those plants can be constructed much faster than the equivalent capacity from renewable generation, for a variety of reasons, but they emit carbon and other pollutants.

“Gas plants are ISO New England’s back-up plan, since air quality is not their mandate,” said Reed, referring to the nonprofit entity that oversees the region’s wholesale electricity markets. “Reliability and capacity are.”

Studies show that if Millstone were to close in the near future, consumers would pay more.

According to a report last year from the Analysis Group, a private economics consulting firm, if Millstone remains open until its operating license runs out in 2030, consumers throughout New England will reap $6.2 billion in net benefits. That includes an average $500 in annual savings for residential electricity customers in Connecticut over the next thirteen years, and $1.5 billion in avoided costs to the region’s wholesale electric capacity markets.

Conversely, if Millstone were to close prematurely, average consumer electricity prices would be 21% higher by 2030. Replacing the plant’s power over the short-term would require a mix of existing and new natural gas generation, both from in-state generators and in the region. That would stress the local natural gas markets, which supply heat and industrial fuels in addition to electricity, and lift costs.

Emissions of greenhouse gases and other pollutants would rise, too. The carbon-dioxide pollution avoided through Millstone’s operations is roughly equivalent to taking nearly 470,000 passenger cars from the road each year. Early retirement of the plant would boost greenhouse-gas emissions by 2.2 million metric tons annually, some 33%, making it challenging for the state to meet its climate targets. Nitrogen-oxide pollution would increase 38%, thus contributing to worsening air quality.

While the research did not quantify the economic impacts from higher emissions, a number of studies have shown that avoided pollution leads to improved health and economic outcomes for society, because fewer air-pollution-related illnesses means less money spent on medical treatments and lower absenteeism among American workers.

The report’s authors note that their analysis was based on conservative assumptions. They assumed that Connecticut and the other New England states will be able to fully meet their current energy and climate goals, in terms of adding increasing supplies of renewable energy. That includes contracting for hydroelectric imports from Canada from the Northern Pass electric transmission project by June 2020, though the project has yet to receive state and federal approvals. Additional supplies of renewables would make the economy more energy efficient, and thereby mitigate natural gas price increases, the report explains.

“But if natural gas prices spike higher than expected, if there’s slower than hoped-for progress in other things you’re doing in your transition, then the value to Connecticut customers is larger” if Millstone remains in operation, said Sue Tierney, senior advisor at the Analysis Group, during a televised hearing on January 24 in Hartford.

Those who favor policies to keep the region’s nuclear plants up and running observe that concerns about rising emissions in New England aren’t hypothetical. In 2015, the year after the Vermont Yankee nuclear plant closed, the region saw emissions rise for the first time in five years, The Boston Globe reported.

“I wasn’t a particular fan of nuclear plants, but I feel they are so important for affordability of a decarbonization strategy that I think it’s important to tell this economic story: That it’s good for consumers, that it’s good for avoiding global warming to think about keeping these safely operating plants online as much as you can,” said Tierney during her testimony. “And to rely on market based principles as a way to get there…to focus on the power of competition.”

A Question of Priorities

Many of those engaging in the policy debate over the future of the region’s nuclear fleet emphasize that it is a question of priorities, and choosing from an imperfect set of options. There are safety issues associated with nuclear power, and costs surrounding the storage of nuclear waste, which is being held in pools and dry casks on the site of the nation’s 99 commercial reactors, given the lack of a national long-term repository for spent fuel.    

Some environmentalists insist that it is possible to address climate change without nuclear power, by promoting an energy mix based on wind, solar, hydroelectricity and storage. They point to officials’ aggressive push to accelerate clean-energy development in a number of states.

In Massachusetts, where the 680-megawatt Pilgrim Nuclear Power Station is set to shut down in two years’ time, officials are hoping to dramatically increase imports of Canadian hydroelectric power, and take advantage of the nascent offshore wind industry here. Last year, Gov. Charlie Baker signed legislation requiring utilities to procure 1,600 megawatts of electricity from offshore wind in a little over ten years, enough energy to power half a million homes. The law also calls on the state to competitively solicit long-term contracts of up to 20 years to procure 1,200 megawatts of hydropower or other renewable resources, and authorizes the state to secure an energy-storage procurement goal.

More than half a dozen transmission lines have been proposed to bring lower-cost Canadian hydropower into New England and New York state, though so far, only one has obtained all of the required siting permits, a proposed 1,000-megawatt cross-border transmission line known as the Clean Power Link.

In New York, officials’ approval of subsidies for the three upstate nuclear plants contrasts with Gov. Cuomo’s recent announcement of a deal to close the Indian Point Nuclear Plant, located less than 30 miles north of Midtown Manhattan, a decade ahead of schedule. Cuomo has said his administration has identified replacement sources of power for the plant, including offshore wind, hydroelectricity and efficiency.  Cuomo has set a target for the state to get half of its power from renewables by 2030.

Others have argued that given the short window of time to available to address climate change in order to avoid devastating global impacts, nuclear power must play a critical role. “The key time frame for mitigating the climate crisis is the next decade or so,” warns a 2013 study  from James Hansen at the NASA Goddard Institute for Space Studies and Columbia Earth Institute. The research calculated that global nuclear power has prevented an average of 1.84 million air pollution-related deaths that would have resulted from fossil-fuel burning, and avoided 64 gigatonnes of carbon-dioxide-equivalent greenhouse gas emissions.

In Connecticut, Rep. Reed said it should be possible to include nuclear power in a strategy to help renewables thrive.

She noted that two of the largest grid-scale renewables projects built in Connecticut in recent years were financed by Dominion Energy, Millstone’s owner:  a 14.6-megawatt fuel-cell project on a brownfield in Bridgeport, and a 5-megawatt solar array on a farmer’s field in Somers.

“I see the potential to create some more intelligent synergies that allow Dominion to help grow our renewables capacity, while also receiving the economic certainty they are looking for to keep Millstone around and churning out our baseload zero-carbon electricity until our renewables are ready for prime time here in New England, where siting anything is a nightmare,” said Reed.

 “We need a realistic transitional plan,” she added. “This requires thinking outside the usual rigid silos that seem to accompany energy industry planning.”

What are the President’s Funding Priorities for Education?

Looking at the President’s 2018 Budget, we are able to see the Administration’s priorities in education.  Note the newly proposed funding for school choice and charter schools and the elimination or reduction of funding for several other education programs and initiatives.

The President’s 2018 Budget provides $59 billion in discretionary funding for the U.S. Department of Education, a $9 billion or 13 percent reduction below the 2017 annualized continuing resolution (CR) level.

The President’s 2018 Budget for the U.S. Department of Education:

  • Increases investments in public and private school choice by $1.4 billion compared to the 2017 annualized CR level, ramping up to an annual total of $20 billion, and an estimated $100 billion including matching state and local funds.
  • This additional investment in 2018 includes a $168 million increase for charter schools, $250 million for a new private school choice program, and a $1 billion increase for Title I, dedicated to encouraging districts to adopt a system of student based budgeting and open enrollment that enables federal, state, and local funding to follow the student to the public school of his or her choice.
  • Maintains approximately $13 billion in funding for IDEA programs to support students with special education needs.
  • Eliminates the $2.4 billion Supporting Effective Instruction State Grants program.
  • Eliminates the 21st Century Community Learning Centers program, which supports before and after-school programs as well as summer programs, resulting in savings of $1.2 billion from the 2017 annualized CR level.
  • Eliminates the Federal Supplemental Educational Opportunity Grant program.
  • Maintains Pell Grant program by level funding the discretionary appropriation while proposing a cancellation of $3.9 billion from unobligated carryover funding. Note that while Pell Grant funding would not go down, that $3.9 billion would not be available under the President’s Budget.
  • Maintains $492 million in funding for programs that serve high percentages of minority students.
  • Reduces Federal Work-Study significantly.
  • Provides $808 million for the Federal TRIO Programs and $219 million for GEAR UP, funds continuation awards only, pending the completion of an upcoming rigorous evaluation of a portion of the program. The plan reduces funding for these programs by $193 million.
  • Eliminates or reduces over 20 categorical programs including Striving Readers, Teacher Quality Partnership, Impact Aid Support Payments for Federal Property, and International Education programs.